A new study from The NPD Group looks at the usage of online radio services among music listeners between the ages of 13 and 35, and finds that in Q4 2012, Pandora and other subscription-based and free Internet radio services accounted for nearly one quarter (23 percent) of their average weekly music listening time. This is an increase from a share of 17 percent the previous year.

As Internet-radio listening rose among this age group, listening to AM/FM radio, which now accounts for 24 percent of music-listening time, declined by two percentage points. In the 36-and-older age group, by contrast, Internet radio accounted for just 13 percent of music listening, while AM/FM radio dominated listening methods with a 41 percent share.

"Driven by mobility and connectivity, music-streaming services are rapidly growing their share of the music listening experience for teens and young adults, at the expense of traditional music listening methods," said Russ Crupnick, SVP Of Industry Analysis at NPD.

AM/FM radio led in Q4 '12 with 24 percent of the music listening share, among 13-35 year-olds, followed by Internet radio with 23 percent and digital files with 15 percent. On-Demand listening held 14 percent of the share, with CDs making up just nine percent. Satellite radio accounted for five percent, while all other options added up to ten percent.

As listening to music on mobile devices increases, NPD’s "Music Acquisition Monitor" also reported a decline in consumers listening to CDs and digital music files. In fact, more than half of Pandora and iHeartRadio users used their mobile phone to access those services. Roughly one in five Pandora or iHeartRadio users are also currently connecting to those services in their cars, which has in the past typically been the bastion of AM/FM radio listening.

Among music listeners between the ages of 13 and 35, Pandora has a significant lead in terms of usage, with 39 percent reporting usage of its free option. iHeartRadio came in second with 11 percent, followed by the free version of Spotify with nine percent. Grooveshark held just three percent of the usage of those surveyed. All of the other streaming music options suggested made up just two percent each: Slacker, Pandora One, TuneIn, Last.fm and Xbox Music.

Six out of 10 consumers (62 percent) between the ages of 13 and 35 who used streaming services used these services more than they had in the past, and 51 percent reported that most of their music listening was in their cars.

"Whether it’s listening to AM/FM radio or Pandora, music continues to be an integral element in the American driving and commuting experience," Crupnick said.